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Craft Brewers Reformulate Beer to Cope With Hop Shortage

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Craft Brewers Reformulate Beer to Cope With Hop Shortage
OAKLAND, California -- At Pacific Coast Brewing here, brewer Donald Gortemiller is reworking his recipes and altering his brewing styles like never before.
Gortemiller isn't acting on a spurt of creativity. He's coping with a worldwide shortage of hops -- the spice of beer. The dry cones of a particular flowering vine, hops are what give your favorite brew its flavor and aroma. Prices of the commodity are skyrocketing as hop supplies have plummeted, forcing smaller brewmasters around the United States to begin quietly tweaking their recipes, in ways that are easily discerned by serious imbibers.
The shortage -- caused by a dwindling number of hop growers worldwide, and exacerbated by a Yakima, Washington, warehouse fire -- has forced Gortemiller to use fewer and different hops than before, changing the flavor of his beer. He's also resorted to beer hacks, like "dry hopping," in which the hops are added late to the mix, consuming fewer hops and yielding a more consistent flavor.
"When hops were $2 a pound, compared to $20 or $30 a pound now, it didn't matter. We'd throw them into the boil at various times," Gortemiller says. "That was an inaccurate way of doing things. We're modifying recipes and using about 20 percent less hops."

Brewer Chuey Munkanta at the 21st Amendment Brewery pulls the grain out of the wash tun.
Photo Jim Merithew,

The beer-brewing situation demonstrates how the global-commodity shortage is spilling over to affect diverse industries in unexpected ways. The hop shortage lives on the outer edges of a food crisis that's prompted riots across the planet, and last month led U.N. Secretary-General Ban-Ki Moon to implore the world's governments to increase food production to stave off a 40 percent jump in the cost of staples.
While nobody in the craft-beer industry is going hungry, they are being forced to adapt. There's no replacement for hops in beer -- they give the brew its flavor. But other key ingredients are in short supply, as well. Malt, which comes from sprouted barley, produces the alcohol and body of beer -- its prices have doubled along with hops. The price of rice, used by industrial brewers, has charted a similar course.
The larger commercial brewers are better off. Most have long-term contracts for hops, barley and rice, and are doing whatever is necessary not to tinker with their brand names.
"Coors Banquet has been tweaked very little since it was introduced in the 1800s," says Molson Coors spokeswoman Jenny Volanakis. "We don't play around with our beers."
But even the big brewers aren't immune from the shortage, says industry analyst Jack Russo of Edward Jones in St. Louis. "Most everybody has raised prices in the 2-to-3-percent range," says Russo.
The small, craft brewers are taking the brunt of the beer crisis, though. "When I called my hop supplier," Gortemiller says, "they told me you're 250th on the list."
At the 21st Amendment Brewery in San Francisco, brewer Shaun O'Sullivan says he just increased the price of a pint 25 cents, to $5.50. Like Gortemiller, he's reducing the amount of hops used in some recipes. "We've backed off," O'Sullivan says. "We had to get smart. We could have easily limped along."
O'Sullivan is lucky. One of his most popular beers is Watermelon Wheat, which "has virtually no hops in it," he says.

Head brewer at the 21st Amendment Brewery, Jesse Houck.
Photo Jim Merithew,

Ken Grossman, the head brewer at Sierra Nevada Brewing Company in Chico, California, says he's not tinkering with his brand-name recipes, such as his Pale Ale. He has long-term contracts in place to purchase his hops of choice.
He's paying more for barley, though -- the price has jumped because of a drought in Australia, flooding in Europe and a trend that has farmers worldwide switching to corn to produce biofuels.
"A lot of brewers got caught short on hops," says Grossman. Still, that hasn't stopped him from brewing a new, hop-laden beer called Torpedo Ale, produced with New Zealand hops. "We have been in a fortunate position," Grossman says.
But not everybody in the business is as beer savvy as is Grossman, one of the first to commercialize microbrewing.
Ian Ward, president of Brewers Supply Group in Shakopee, Minnesota -- the nation's largest craft brew supplier -- says things are only going to get worse. "That's the crisis that brewers are finding themselves in," Ward says. "They're having to review their recipes. The crisis really hasn't hit hard yet."
The hop shortage became noticeable around July, when a market glut and hop reserves stored in extract began dwindling.
The bulk of U.S.-grown hops are produced in the Yakima, Washington, area. Farmers weren't getting a profitable return and got out of the market, switched crops or went bankrupt. The same was happening in Germany, the world's No. 1 hop-growing country.
In the United States alone, there were an estimated 515 hop growers in 1950; 75 in 2000 and just 45 today, Ward says. In 2006, about 2 million pounds of hops were destroyed in an S.S. Steiner warehouse in Yakima, equaling about 4 percent of the U.S. hop crop.
All the while, beer sales are increasing worldwide by about 1 to 2 percent annually. The craft brewing industry is growing yearly by 12 percent. That economic reality is pushing hop growers back into the fields.

21st Amendment head brewer Jesse Houck adds hops to the brew.
Photo Jim Merithew,

About 8,500 acres of hops were just planted in Yakima alone, and about 2,500 thousand acres in Germany, Ward says.
"The cure for high prices is high prices," he says.
But that isn't sitting well with Omar Ansari, the owner and brewer of Surly Brewing in Brooklyn Center, Minnesota, who just signed a long-term hop deal
"My jaw hit the floor when I saw the price," Ansari says. And next year, he'll have to reformulate his brown ale Bender beer, a blend he described as a "flagship" flavor requiring the "Willamette" hop from the Pacific Northwest.
"We were informed by our supplier that next year we can't get that hop. It's just gone,"Ansari said. "We're going to have to make changes."
"Everybody," he says, "is crossing their fingers there is going to be good hop crop."

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